tv [untitled] June 19, 2012 6:00am-6:30am PDT
each year. we have split the current year fund balance equally over the next few years. we have assumed that the growth in the hotel path accrued to the general fund. we have also been fortunate in advocacy of the state level related to realignment, receiving an increased allocation from public safety realignment. finally, we have some one time revenues included in the budget. $90 million for the first year contributed to balancing the budget. on the city-wide savings side, we have a number of items that will seem familiar to you. they are similar solutions to
those prepared in the plan, including controlling the benefit costs, which are a reflection of the negotiations that we did. the only thing we are funding is the nonprofit contractors. we are not fully funding the transfer to the school district. we have also reduced the state reserve. as you will recall, we have a budget incentive savings reserve when the department faces funds in the current year. beguin be used for one time costs going forward. finally, we have debt restructuring and i.t. spending. those solutions in the first year are about another 90
million. in the second year, about 206 million. on the department will side -- departmental side, the majority of these are regimented with additional revenue. primarily metical belated. there are some small savings proposals with a significant amount of revenue related to the community options. the juvenile probation department has additional revenue. rec and park also have its revenue -- has revenue to keep it little jail clothes. that will generate savings. then there is a variety of other changes in the departments. those of departmental specific
solutions -- those departmental specific solutions are included in this budget, along with funding and restorations. you can see the costs to the right. we have included additional funding for the bayview and central market redevelopment activities in those areas. we have fully restored introductions in the first year. we are moving forward with the mayor is investing neighborhoods approach as well as funding the reviving loan fund. the budget also includes funding for the annual cost of the program at the human services agency.
it implode -- it employs low- income individuals. there's also additional revenue being received on the alignment side, making the investment services primarily for individuals returning from prison. we are also including funding for jobs readiness in the budget. other investments in the budget are spread across many departments, like the fire academy and funding for the -- for certain programs in immigrant affairs and other important programs. so, this is just finally a high level summary of how we balance.
you can see a split between revenues and expenditure savings. more on the revenue side. i am happy to answer any questions that you have. i would like to say thank you to my staff, who has a work hard over the last month. thank you to the budget analyst for their hard work on this as well. i look forward to working with you over the next couple of weeks. supervisor chu: could you please quickly touch upon the [unintelligible] is one of the items before us, items number 10. >> certainly, the bisser is comprised of funds saved by the department, which allows the department to retain those
funds and they can be spent on certain onetime costs. primarily capital i.t. or equipment. i believe that you have before you a letter that describes the uses. primarily, but you will see is that their funding capital expenditures. >> thank you very much. supervisor chu: jig thank you -- supervisor chu: thank you very much. if i can ask, before the comptroller's office turns to the revenue before us, items 8 and 9, prop jay, if you could speak quickly to that, i believe that they are all continuing.
>> madam chair, did you want us to present it at this time? supervisor avalos: -- supervisor chu: perhaps just now, since we are doing the introduction to the budget. waxed so, what is before the committee is the resolution incurring that it is less costly to provide selective services. all of the requests are for services that have been contacted after many years. there are two items. for this particular service, we have found that there is a particular service saving with a rush to the general fund.
there are a number of requests for a number of departments. for the board of supervisors' budget analysts and the voter ballots distribution, the city administrator office security shop the convention facility management within security services at the department of technology mainframe system support. security services at the human security services agency and that the sheriff's department. in each of these, we have identified the savings as outlined in the resolution. none of these instances have the contracts resulted in service
editions. again, many of these have been contracted out for more than one decade. i am available to answer any specific questions the committee may have. supervisor chu: items 8 and 9, these are continuing, they are not new prop j's? >> that is correct. supervisor chu: ok, thank you. let's turn to our controller. >> hello, supervisors. on the reasonable moments in the assumptions proposed to the board each year, it is available on our website. there are copies, four members of the public who are interested.
generally speaking, i will walk you quickly through the report. we find the revenue assumptions in the mayor's proposed budget to be reasonable. for the first time, you have a two year budget before you. we find that that framework is balanced on one time sources. these are unexpected challenges as you work through this process. two notable factors that we will be monitoring through this cycle, the first is the pace of economic recovery. assumed in the budget before you in a way that we can talk about in more detail, lastly the wild card, again, for local governments in california has to do with state and budget uncertainties.
one out of every $5 in the budget, given the ones at other levels of government. that is the most uncertainty in the budget before you. so, first, local tax revenue projections assume healthy growth during this period. a slower, $109 million in the second year. this is largely driven by our economic output and the effect on tax revenues, which we will continue to monitor and issue updates through this cycle. related specifically to state and federal budget uncertainty,
there are unknown reductions contained in the second year. >> just a question? >> supervisor? >>supervisor avalos: in the past we have not taken out of the reserve very much for state and federal issues. in terms of the past and assessing what it is looking like -- >> our office in the mayor's office are reviewing the budget from friday. very little information is available at this point. we will continue to spend one week reviewing the details of it as information gets pushed out. a lot of the details in terms of
how that impacts san francisco and clients, most of those are client driven. a lot of those details are in the trailer bills. as this week rose a long and into next week, there will be greater clarity, but we do not have much more than we did two weeks ago. >> at the capitol this is based on past revenue as well? does that create any uncertainty about the size of reserve? >> there is very little hinged in the facebook -- in the budget before you. there is no assumption. supervisor avalos: state ballot
measures? >> i apologize. the single largest bloc remains the governor an alternative revenue. even when we have clarity regarding what has been adopted by the state for the year ahead, there will be continued uncertainty through the end of november. supervisor avalos: we are looking at -- we do not have the details of the current capital budget yet, but we have another variable from possible revenue passed in a member.
>> it is very hard to guess. we have $50 million adopted. ultimately, the city withdrew the majority of those funds. in the current year we have budget cuts adopted last summer. a lot of these reductions would have had a severe impact on the city and county. some of it may be resolved in the year ahead. it is very difficult to guess what the future might hold, given the wild card of a revenue measure on the ballot, given their recent history of having cuts adopted and blocked. it really is anyone's guess.
i will say that the second year did not contain state reserve, of course. almost certainly we will have a reduction in year two. there will be choices in the second year, you will be reviewing it again next year. do you want to add money to that reserve in the second year? do you want to manage cuts as they come? if the city's finances are not otherwise able to absorb them? supervisor avalos: do we have that choice about the first year as well? we have had larger state reserves. it just needs to be considered overall.
let's given the magnitude of the state budget cuts in terms of our local health and welfare services, set aside it will increase flexibility. supervisor chu: thank you. i know that we had a state reserved in the past, and i think that as miss rosenfeld spoke to, it is difficult to find the subsidies, for child care a loan i think that hsa has worked with different providers to see what the impact would be. so, if the state budget came to be as it was when they did that analysis, we intend to recover that.
that does not include in home potential service cuts, amongst other things. i think that we should think about that issue. child care is obviously part of it. i do not know that it is adequate, but i do not know that we have a better number, either. sueprvisor kim: can you go over what we were down this year from the state measured reserves? >> certainly. let me grab the report.
so, of the $50 million allocated in the current year, just over $10 million has been allocated by the board for other services. including health programs, restored for the current year. it was a major source of funding for the department of public health appropriation issue with state cuts that were approved several weeks ago. those were last lead to draw from ryan white. all told, after those, there was a balance available that was soon closed into the general fund as of the nine month report and has been real appropriated, largely to fund the new 15 million. sueprvisor kim: thank you.
>> flipping to the general fund, quickly, the revenues are expected to improve by $280 million. about $130 million in the second year. this is being driven heavily by large growth taxes. transfer, payroll, and registration fees. each of which is growing in each of which is now above a pre- recession level. for transfer tax in particular, we have set a record in the current fiscal year for collection and are expecting the real-estate market to run hot in this city for the first year,
setting a new record in the current -- in the fiscal year. that is a largely high-end commercial property. the budget again does assume continued economic growth and recovery during this period of time. this slide shows you the growth rates in the last projection. you can see very healthy growth rates for the majority of our taxes, payroll, sales, hotel, assumed in both years of the budget, part of it covering the recession from the last couple of years, the pressing lee's beyond long-term norms. property taxes, we assumed, crethad growth above meaningful levels, with lower growth rates
on other parts taxes. you can see that we are expecting the level of property transfer taxes to be modestly higher than the future. so, we do not see that overheated level continuing, approximately 10% of of that piece in the second year budget. supervisor chu: supervisor avalos? supervisor avalos: i thought that we had seen a dip from the six month report to the nine month report. >> so, these are -- we actually, at the nine month mark, we expected growth related to property taxes in the fiscal year. this is really driven by a handful of factors.
number one, prop. 13 does not contain inflation factors where in any year the property tax rolls rose by 2%. for the last several years, inflation has been under 2%. for the coming two years, we will have our usual 2% automatic adjustment for the currently assessed properties in the city. the assessor's work through a bf supplementals pending from prior years. we are expecting that to continue. in particular, in the first year. and we are assuming hear some recovery in residential and commercial property values will mean, while we continue to see a large number of appeals coming to the city in this two-year period, we are assuming as the
markets begin to recover for commercial and even residential, that means we will have to set aside less money for those appeals, which we anticipate in both years. those three factors together are the dominant factors of it. underlying property growth, supplementals, escapes, the need to set aside less for appeals. the budget does, and a couple of cases, use reserves as a funding source. first, the mayor does propose in the budget to withdraw the maximum allowable amount from our rainy day fund for the school district. that is 25% of the remaining balance in the fund. that is 6.3 million in fy12-13.
the budget also spends available balances in their rec and parks savings incentive desert, -- reserve. secondly, as you just talked about, the budget spent the available balance in the available savings and incentives fund in both fiscal years on one time projects. as ms. howard noted, the budget does, while it is drawing on some reserves, is growing others. the general fund reserve is scheduled, per the board adopted a set policy, to grow to $32.2 million in 12-13, off $4.7 million in 13-14. the growth in the property
transfer tax, which i mentioned earlier, which is above the rolling five-year policy adjusted average, a portion of the growth that is up deposited to the stabilization reserve. if the transportation tax comes to pass, a portion of that comes off the peak and is deposited into the reserves. we would expect to end a two- year period with approximately $52 million in the stabilization reserve that would be available the next time the city goes into a downturn. lastly, baselines. the report does report on our various voter adopted set aside ordnances and other requirements. generally speaking, the fed to baselines have been adopted by the voters are funded by the mayor's proposed budget.
the children's baseline is funded above voter mandated levels in both years, approximately 12 million over mandated levels in 12-13, 7 million the year after. the two records that would appear not to be met in the budget before you are police staffing and substance abuse treatment on demand. policemen and staffing requires 190071 full duty officers in the city, given the hiring plans that are contained in the budget. we see progress toward that goal in both years but we anticipate remaining well short of that mandate in both years of the budget. approximately $200 million below the prop d staffing levels in the first year, 175 in the second year. there is no allowance in proposition c, which was adopted
later, for adjustments to be 1971, in cases where the mayor of civilianize his positions. we're looking at opportunities for that this wednesday when we have the police department. i can report more at that time. supervisor chu: supervisor wiener? supervisor wiener: this is perhaps more of a question to ms. howard about prop h. i saw that the mayor proposed pulling the trigger, which i think reduces the cash contribution fo. i know in the past we have done that because of awful budget years, not at this year is perfect, but it does improved. maybe i could get the mayor's rationale for pulling the trigger once again. >> i can mention the role and then ms. howard can comment on the policy implication.
the voter mandate for proposition h. did allow for the mayor and the board of supervisors to reduce the voter adopted funding allocation to the school district. the shortfall exceed $100 million. that leaves this option open for the board and mayor. >> supervisors, a kid howard. budget director. the threshold was met. as you recall, the projected to shortfalls at the time of the report were $170 million and $312 million. for that reason this seem to be an appropriate part of balancing. you will note the budget does on the full transfer of the rainy day fund to the school district